Ready, Set, Spend

Get out your checkbooks, small business folk -- the economic stimulus package is about to become law.

You'll recall that when we last checked in on Capitol Hill, Senate Democrats had rejected their Finance Committee Chairman's Faustian bargain to extend rebate checks to both people who need them (seniors and disabled vets) and those who don't (the affluent) while diminishing rebates to the middle class. Instead, the Senate scheduled separate votes to 1) extend food stamps and unemployment insurance, 2) expand low-income heating assistance, and 3) send rebate checks to seniors and disable vets.

Ultimately, the seniors and vets won out; the hungry, the cold, and the unemployed did not. Both the Senate and House have passed the revised "stimulus" bill, and the president will sign it next week. I use the quotes because the political compromise necessary to get the bill passed means it will do relatively little to actually stimulate the economy.

And so, my entrepreneurial readers, it is your patriotic duty to invest in your firms. The first incentive headed your way allows any business to depreciate an additional 50 percent of the cost of plant or equipment purchased in 2008. The second measure specifically targets small business by temporarily rewriting Section 179 of the Internal Revenue Code, which allows big first-year deductions on certain expenses. The new law raises the limit on qualifying expenses from $500,000 to $800,000 and increases the deduction from $125,000 to $250,000. (Meaning that if you have spent less than $800,000 on the kinds of expenses eligible for the deduction, you can take $250,000 of that expense off your taxes in the first year. The deduction diminishes to zero when your expenses reach $1,050,000 and you must use the regular depreciation schedules.)